USD - America's currency was once again a victim to the tug-of-war action stemming from market uncertainty, as a mixed bag of economic data left traders frantically searching for clear direction. Markets opened last week with a sense of foreboding, as the closely watched Consumer Confidence Index dropped precipitously m/m (47.7 in Oct. vs. 53.4 prior). Moreover, New Home Sales fell shy of expectations (402K in Sep. vs. 440K exp.), as did Initial Jobless Claims (530K for 10/24 vs. 525K exp.). Market sentiment quickly did an about-face, however, as a string of sanguine data followed in rapid succession: Durable Goods (1.0% in Sep. vs. -2.6% prior); Chicago PMI (54.2 in Oct. vs. 46.1 prior); Univ. MI Confidence (70.6 in Oct. vs. 69.4 prior). The pinnacle of positive market sentiment for the world's largest economy last week was the robust Q3'09 GDP release (3.5% vs. -0.7% prior). The datum marked the first break from more than a year's worth of economic declines, and the first concrete sign of emergence from the miry depths of the worst recession since The Great Depression. Markets have more reason to cheer this morning as the ISM Manufacturing data showed a stalwart ascent (55.7 in Oct. vs. 52.6 prior), while Pending Home Sales surpassed market forecasts (6.1% in Sep. vs. 0.0% exp.). Furthermore, the DJIA is back in positive territory again this morning (9,821 vs. 9.712.73 close Friday), which is helping to fuel the USD carry trade, once again putting pressure on the greenback as risk sentiment improves. A substantial week of economic event risk promises no shortage of excitement in the days ahead. In particular, all eyes will be focused on Wednesday's FOMC Rate Decision, as well as Friday's NFP employment report. EUR - The euro rose to the upper end of recent ranges vs. the dollar as the pace of its rapid gains eased amid investor caution. The single currency rose to $1.4845 overnight as investor concerns over the global economic recovery kept the euro largely range-bound last week between the mid $1.46-$1.48 levels. The Eurozone showed signs of continuing recovery, albeit at a measured pace, as Consumer and Industrial Sentiment, while reporting improvement, remained negative at -18 and -21, respectively, in October. This sentiment was corroborated by E-16 unemployment which remained unchanged at 9.7% in September, and today's PMI, which at 50.7 in October, crossed modestly into the 50 territory separating growth from contraction. Given this, euro gains are likely to remain like the Region's recovery-gradual.

GBP - After many weeks under pressure, sterling made a strong comeback last week. Few would have bet on this what with the BoE having spent weeks talking down GBP with dovish rhetoric and the publication of dismal growth figures for Q3 which confounded analysts' expectations by showing that the UK is still deep in recession. GBP remains quite weak, and few would argue that it does not have considerable potential even after the past week's rally as financial and economic conditions continue to normalize. The big question ahead of the BoE's meeting on November 5th is not whether the Bank Rate will be raised from its current record-low 0.5%, but whether the BoE may expand its already huge program of asset purchases in order to keep interest rates down and thereby stimulate the economy beyond what would be possible with traditional monetary policy means.

JPY - The yen declined against the dollar as positive manufacturing and housing reports in the US and a rise in China stocks helped investors sell the safe-haven currency. Last week, the BoJ kept interest rates unchanged at 0.10% and announced it will stop buying corporate debt at the end of the year. Japanese retail sales beat forecasts and rose 0.9% in September. The market is looking ahead to the minutes from the Central Bank's latest policy meeting to determine if the economy is in the process of recovery. Meanwhile, Japan's leading economic indicator is expected to post its sixth month of improvement (86.2 in Sep. vs. 83.2 prior).

CAD - The loonie officially cemented a marked decline against the USD giving up over 3% on risk reversal across the markets. In keeping with its proxy to the markets, the loonie sunk with the DJIA, (also losing 3% before last Friday's recovery) and crude oil, which saw it first appreciable declines in a month, gave up 5% ($81.41 - $77.06) on last week's session. The week started poorly for commodity currencies as Canadian stocks fell the most in three weeks on raw-material producer declines over concerns that the global economy will be slow to recover following a drop in US consumer confidence. Royal Bank of Canada, the country's biggest lender, dropped 3.5% as financials retreated. Kinross Gold Corp., the nation's third-largest gold producer, sank 6.2% after reducing its production forecast for the year.

MXN - The peso followed suit with a 2.4% decline vs. USD before a strong appreciation on Friday's session to reverse those losses and gain an additional 0.3%. The Mexican Senate remains embroiled in debate over President Calderon's tax proposals, which suffered a set-back last week as Mexico's second and third-largest parties in the Senate reached an agreement to block a 3% tax on Internet service approved by the Lower House of Congress. Mexico's dollar bonds are posting their biggest monthly declines since January on speculation President Felipe Calderon will fail to cut the budget gap enough to avoid a credit-rating downgrade. Analysts are reporting that Mexico's economy likely shrank 6.4% in the third quarter of this year.

CNY - The yuan is little changed vs. the dollar at 6.8279. Commerce Minister Chen Deming commented that the yuan will remain stable to provide its exporters and manufacturers a predictable economic environment to operate.